Can a Mexican retailer who will resell the goods in Mexico buy them tax-free from a Texas seller, and if so, what documentation is required?

Plain-English summary

A taxpayer wrote in asking about purchases by Mexican retailers who are reselling goods in Mexico. The Comptroller's office explained that the sale-for-resale exemption is completely different from the exemption for exports, and that the procedure for documenting proof of export to Mexico (Rule 3.323(c) and (e)) had not changed — purchasers buying goods for their own use still cannot claim a sale-for-resale exemption instead.

But for actual resale purchases, the letter confirms that effective September 1, 1995, Mexican retailers may purchase goods tax free that they will resell in Mexico. To do so, the Mexican retailer must:

• Properly complete a Border States Uniform Sale for Resale Certificate, and
• Give the seller a copy of their duly authorized Mexican Registration Form (Registro Federal de Contribuyentes), and
• Show their Federal Taxpayers Registry (RFC) number — an alpha-numeric number assigned by the Mexican government — on the resale certificate.

The exemption applies regardless of whether the goods are picked up from the Texas seller or shipped into Mexico. The Comptroller's office also noted it had revised the Texas Resale Certificate (Rev. 11/95-3) so it can be used in place of the Border States Uniform Sale for Resale Certificate; either is acceptable as long as it is properly completed and accompanied by a copy of the purchaser's Mexican Registration Form. Older versions of the Texas Resale Certificate lack the required certification language covering purchases "within the geographical limits of the United Mexican States," so those older forms don't work for this purpose (see Rule 3.285(d) on purchases by retailers outside Texas).

What this means for you

Texas sellers doing business with Mexican retailers

You can sell tax free to a Mexican retailer who is buying for resale in Mexico, but only if you collect a properly completed resale certificate (Border States Uniform Sale for Resale Certificate, or the current revised Texas Resale Certificate, Rev. 11/95-3) along with a copy of the buyer's Mexican Registration Form (Registro Federal de Contribuyentes) showing their RFC number. It doesn't matter whether the buyer picks the goods up in Texas or has them shipped into Mexico.

Mexican retailers purchasing from Texas sellers

Make sure you provide your RFC number on the resale certificate and give the seller a copy of your Mexican Registration Form. Don't confuse this resale exemption with the separate export exemption — if you're buying goods for your own use (not resale), you can't use a resale certificate; the export documentation procedure under Rule 3.323(c) and (e) applies instead.

Accountants and tax professionals

Watch for outdated paperwork: older versions of the Texas Resale Certificate don't contain the certification language needed to cover sales into Mexico, so confirm clients are using the revised form (Rev. 11/95-3) or the Border States Uniform Sale for Resale Certificate.

Common questions

Q: Can a Mexican retailer buy goods tax free from a Texas seller if they're reselling them in Mexico?
A: Yes, effective September 1, 1995, as long as the retailer properly completes a resale certificate and provides a copy of their Mexican Registration Form showing their RFC number.

Q: Is this the same as the export exemption?
A: No. The sale-for-resale exemption is completely different from the exemption for exports, and the two have separate documentation procedures.

Q: What paperwork does the Mexican retailer need to provide?
A: A properly completed Border States Uniform Sale for Resale Certificate (or the revised Texas Resale Certificate, Rev. 11/95-3), plus a copy of their Mexican Registration Form (Registro Federal de Contribuyentes) showing their RFC number.

Q: Does it matter whether the goods are picked up in Texas or shipped to Mexico?
A: No — the sale-for-resale exemption applies either way.

Q: Can an older version of the Texas Resale Certificate be used?
A: No. Older versions lack the required certification language referencing sales "within the geographical limits of the United Mexican States," so they don't support this exemption.

Q: Can I rely on this letter for my own situation?
A: This opinion is based on the facts submitted; other facts, though similar, may yield different results.

Citations and references

• Rule 3.323(c) and (e) (documenting proof of export and refunding sales tax paid by customers who export goods)
• Rule 3.285(d) (purchases by retailers outside Texas)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9606L1424A05

Original ruling text

June 20, 1996

Dear **:

Thank you for your letter concerning purchases by Mexican retailers who are
reselling the goods in Mexico.

The sale for resale exemption is completely different from the exemption of
exports. The procedure for documenting proof of export to Mexico has not
changed and purchasers who are buying goods for their own use may not claim a
sale for resale exemption. The enclosed Rule 3.323(c) and (e) explains the
procedure for documenting proof of export and for refunding sales tax paid to
customers who have exported goods.

Effective September 1, 1995, Mexican retailers may purchase tax free the goods
they will resell in Mexico. Mexican retailers must properly complete a Border
States Uniform Sale for Resale Certificate and give the seller a copy of their
duly authorized Mexican Registration Form (i.e., Registro Federal de
Contribuyentes). Mexican retailers must also show their Federal Taxpayers
Registry (RFC) number, which is an alpha-numeric number assigned by the
Mexican government, on their resale certificate. The sale for resale
exemption is not dependent on whether the goods are picked up from the
Texas seller or shipped into Mexico.

We have revised the Texas Resale Certificate form (Rev. 11/95-3) so that it
can be used instead of the Border States Uniform Sale for Resale Certificate.
Either certificate is acceptable as long as it is properly completed and the
purchaser provides a copy of their Mexican Registration Form. Older versions
of the Texas Resale Certificate do not have the required certification
language that states "...or within the geographical limits of the
United Mexican States, ..." See enclosed Rule 3.285(d) on purchases by
retailers outside Texas. I have also enclosed a copy of the Border States
Uniform Sale for Resale Certificate and the revised Texas Resale Certificate.

This opinion is based on the facts you submitted. Other facts, though similar,
may yield different results.

You may call me toll free at 1-800-531-5441, ext. 5-0030. The direct line is
512/475-0030. You may also write to Tax Policy, Comptroller of Public Accounts.

Sincerely,

David Somerville
Tax Policy Division